Industry development investment ($)25. Ratio of new products (*two years old) to product family (%)26. Ratio of new products (*two years old) to company catalog (%)27. R&D invested in basic research (%)28. R&D invested in product design (%)29. R&D invested in processes (%)30. Investment in new product support & training ($)31. Average age of company patents (#)32. Patents pending (#)While Edvinsson and Malone again include some frivolous elements (such as the average customer age and customer education), there are other segments of the report that are highly valuable.The ratio of new products to old products is a gauge of innovation. The number of patents pending and the breakdown of R&D into basic, product, and process research is helpful to an investor. It must be noted that well-informed investors already seem to recognize such intangibles. If Company X issues a press release indicating the acquisition of a new customer base or the patenting of an innovation, investors perceive a rise in Company X’s value due to these intangible assets. For example, in 1999 Warner-Lambert Co. had the highest ratio of knowledge capital to book value in its industry (4.3 to 1). Soon after, competing pharmaceutical firms launched bids to buy the company based on their R&D. It is managers who may resist offering such information. When R&D fails to be useful, the manager may receive criticism from the shareholders. If the shareholders do not know where R&D money has been spent, they are less likely to lay blame on the manager.It should also be noted that companies have been purchased and then lost the knowledge base of people within the group who made the company so attractive for purchase in the first place. This is due to a lack of understanding on the part of the buyer of how to manage the knowledge capital of the firm.General Arguments Lodged Against Intellectual CapitalDetractors lodge a variety of arguments against accounting for IC....
